A surprise rate hike from the Reserve Bank of India (RBI) triggered fears that other central banks in Asia may step up inflation-fighting efforts, leading shares lower across the region yesterday Monday March 22.
Analysts had widely expected the RBI to raise rates soon, but the timing of Friday’s 25-basis-point rise for its key lending and borrowing rates, between policy meetings, caught markets off guard.
“India’s surprise rate hike may renew concerns about the prospect of an earlier-than-expected rate increase by China,” Kim Seung-han at HI Investment & Securities in Seoul told Dow Jones Newswires.
Markets have nervously watched China after it took steps to calm inflationary pressures by repeatedly ordering banks to increase their capital reserves in recent months – limiting the amount of money they can lend.
China last Thursday ordered 78 state-owned companies, whose core businesses were not related to the property market, to stop investing in real estate amid concerns a damaging bubble is forming in the sector.
Markets in Japan were closed for a public holiday yesterday.
SHANGHAI edged up 0.22 percent, or 6.83 points to 3,074.58, buoyed by airline stocks but doubts over the government’s latest efforts to rein in property prices limited gains, dealers said.
HONG KONG: Stocks fell 2.05 percent yesterday amid fears of tightening moves by central banks in the region following India’s surprise interest rate increase last Friday.
The benchmark Hang Seng Index tumbled 437.57 points to 20,933.25.
SINGAPORE: The stock market slid 0.9 percent yesterday to its lowest since last Tuesday.
The benchmark Straits Times Index closed 26.52 points lower at 2,889.18.
Commodity firm Noble Group fell 2.6 percent or 9 cents to S$3.34. DBS Group rose 24 cents to S$14.36 while Jardine Cycle and Carriage fell 38 cents to S$26.88.
SYDNEY dropped 42 points, or 0.87 percent, to 4,830.2.
MUMBAI shares fell 0.95 percent or 167.66 points to 17,410.57, led by rate-sensitive property, auto and banking stocks. Property firm DLF fell 3.61 percent or 11.3 rupees to 301.4 while Tata Motors fell 3.02 percent or 23.7 rupees to 760.
KUALA LAMPUR: Share prices on Bursa Malaysia yesterday continued to move sideways in their bids to consolidate their recent gains.
Overall declining counters outpaced advancing ones by 364 to 301.
The Kuala Lumpur Composite Index (KLCI) fell from its intra-day high of 1,297.94 to its intra-day low of 1,292.21 yesterday. It closed at 1,293.65 points, giving a day-on-day loss of 2.95 points, or 0.23 percent.
In other markets:
SEOUL closed down 0.80 percent, or 13.44 points to 1,672.67.
TAIPEI closed down 61.93 points or 0.78 percent at 7,835.98.
JAKARTA lost 40.57 points or 1.48 percent to 2,702.40.
BANGKOK edged down 0.30 percent or 2.34 points to close at 772.25, amid continuing anti-government protests.
MANILA closed down 0.43 percent, or 13.34 points to 3,083.89.
VIETNAM: The index of Hochiminh Stock Exchange (STC) dropped 4.41 points or 0.85 percent to end at 511.58 pts with the total matching order trade of nearly 40 million shares for over 1.675 trillion dong.
The HNX Index also lost 1.45 points or 0.85 percent to close at 168.4 pts with the total market trade of 26.26 million shares valued at 891.28 billion dong.
EUROPE: European shares pared losses yesterday afternoon, with gains in food producers and tobacco stocks offsetting falls in banks and oil majors as investors reassess worries over debt problems in Greece.
By 1521 GMT, pan-European FTSEurofirst 300 index shed 0.1 percent at 1,064.02 points, well off its session low of 1,052.04 points.
Banks pared some earlier losses, with traders attributing the move to an easing in concerns over Greece’s debt situation.
Barclays, HSBC, BNP Paribas and Deutsche Bank lost 0.5 to 1.1 percent.
Across Europe, in Paris the CAC 40 rose 0.07 percent to 3,928 while in Frankfurt the Dax gained 0.08 percent to finish at 5,987.50 points.
AMERICA: Drug and hospital companies led stocks higher Monday after House lawmakers ended months of uncertainty and approved the health care overhaul bill.
The Dow rose 43.91, or 0.4 percent, to 10,785.89. It has risen 14 of the past 17 trading days and stands at its highest level since October 2008.
The Standard & Poor’s 500 index rose 5.91, or 0.5 percent, to 1,165.81. The Nasdaq composite index rose 20.99, or 0.9 percent, to 2,395.40. It closed at a new high for the year and is at its best level since August 2008.
Bond prices rose, pushing down yields. The yield on the benchmark 10-year Treasury note fell to 3.66 percent from 3.70 percent late Friday.
The dollar fell against other major currencies. Gold fell.
Crude oil rose 57 cents to $81.25 per barrel on the New York Mercantile Exchange.
Two stocks rose for every one that fell on the New York Stock Exchange, where consolidated volume came to 4.3 billion shares, compared with 5.7 billion Friday. Trading was heavy Friday because of the expiration of options and futures contracts.
The Russell 2000 index of smaller companies rose 9.02, or 1.3 percent, to 682.91.
Benchmark Currency Rates USD EUR JPY GBP CHF CAD AUD HKD HKD 7.7609 10.5286 0.0859 11.7238 7.3375 7.6323 7.1284 AUD 1.0887 1.477 0.012 1.6447 1.0293 1.0707 0.1403 CAD 1.0168 1.3795 0.0113 1.5361 0.9614 0.934 0.131 CHF 1.0577 1.4349 0.0117 1.5978 1.0402 0.9715 0.1363 GBP 0.662 0.8981 0.0073 0.6259 0.651 0.608 0.0853 JPY 90.355 122.577 136.492 85.4251 88.8577 82.9911 11.6423 EUR 0.7371 0.0082 1.1135 0.6969 0.7249 0.6771 0.095 USD 1.3566 0.0111 1.5106 0.9454 0.9834 0.9185 0.1289 Bloomberg